tv Mexican Officials Discuss U.S.- Mexico Economic Relations CSPAN April 21, 2017 10:57pm-11:39pm EDT
books about joe mccarthy. there was no biography of the senator who had the backbone to stand up to them first. >> do you remember how you went about preparing for that speech? >> hardest i've ever worked on anything i've ever delivered from a podium. sunday night at 8:00 on c-span's q&a. c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies. it is brought to you today by your cable or satellite provider. >> as part of his visit to washington, d.c., mexico's
finance minister discussed his country's economic ties to the u.s. in the future of the north american free trade agreement. from the center for strategic and international studies, this is 40 minutes. >> hello, everyone. i will call us to order relatively quick. sorry we are running late. the secretary has a hard stop at 2:45 so i want to get moving. we hope this is the first of many visits to our new program here with a review focus on both the americas and mexico and particularly you also want to welcome ambassador gutierrez and
ambassador joins for joining us today. i am required by the powers that be to give you a security announcement. this is the 21st century washington, d.c. if there were a security incident to happen, follow the guidance of csi s staff. we will be exiting and meeting behind us at the national geographic museum. when dr. hanley does the announcements, he plans -- promises to buy everyone a ice cream. since it is friday, i proposed cocktails. this is a particularly important moment for us in the u.s. mexico bilateral relations and we are thrilled his secretary is here to talk about the mexican economy, u.s. economy and our bilateral relationship, and how we can make our economies work better for larger percentages of the people in both countries. ambassador gutierrez has described it as a critical
moment, not in a negative way, but just as an inflection point. i think that is a fair characterization. with that, i have the pleasure of introducing ambassador jones who will be the master of ceremonies. he generally goes without introduction in these sorts of events. a former member of the u.s. congress, chief of staff in the white house, former ambassador to mexico, one of the best and beloved former investors to mexico, i should say. thank you for leading us today. the floor is yours. >> thank you very much, kim. thank you to csis for putting on this program. one of the things i have always been astounded by going back to 50-plus years when i first went to mexico with president johnson and then as ambassador 25 years ago, to the present time, is to be such close neighbors, how little we know about mexico and
mexicans as a country. i find that particularly alarming in the official washington. so programs like this are very important, particularly at, as the ambassador says, a critical time in our bilateral relationship. if we are going to move forward, we really have to know each other, and what we learn we have to spread to other people. i think that is one of the real values of what csis is tuned today. i would like to call on the mexican ambassador to the united states for a few words. gutierrez became ambassador in january of this year but he is no stranger to u.s. and u.s. policymakers. his previous job was as head of the north american development bank, which is headquartered in san antonio, where he undertook a number of initiatives, particularly to focus on
infrastructure all along the border and focus on innovative financing mechanisms. he substantially increased the loan portfolio of the nad bank over the years he was there to an average of 32% increase per year during his time there. he was under secretary of foreign relations for north america. that is where i first got to know him. i have observed in and have been very impressed with his knowledge not only of mexico, but of the process and the politics of the united states, and the relationships that he has made. because of that, i feel very confident that the relationship we have will grow even stronger during his time in washington. ambassador gutierrez, would you
say a few words? [applause] >> thank you very much, ambassador. as always, you are far too generous with your comments. thank you all for being here. as any good ambassador knows him of when you have such a distinctive visit from the capital, it is not your show, it is their show, and we do have the opportunity to have a secretary here with us today. so i will be very brief and say a couple of things. the first one is again emphasizing how pleased we are to have you, mr. secretary, here at csis, in washington. as i have told him before and i said publicly, few people in the mexican government have actually made history in the way that the secretary has done, serving in different cabinet positions over
the last two administrations. more importantly, being absolutely respected and admired from different political angles in mexico. there is not someone that can be as competent today to talk to you about the outlook of the mexican economy, some of its opportunities and challenges. so we are very happy to have you, mr. secretary. and to think csis for hosting this important event. i do have to say, the center has come in a sense, strengthened its presence and engagement with mexico. recently and especially will be doing so through the u.s. mexico futures initiative. we look forward to working with the center, as i said, informed the u.s. mexico bilateral relationship. so thank you, ambassador, mr. secretary, it is a pleasure to have you here. [applause]
>> thank you, ambassador gutierrez. amb. jones: now it is my pleasure to introduce our guest. he has such respect, as ambassador gutierrez said, in all quarters of mexican politics and business, for his distinguished career in public service. he has been cabinet minister in both the calderon government and in the pena nieto government. in the previous government he was the minister of energy. he was the minister of finance. in this government, he is first of all minister of foreign affairs, minister of social development, and now back to minister of finance. there has only been one other mexican leader that has had that
distinguished career of five minister positions. that was elias, who became the president of mexico after the mexican resolution -- revolution. that leads me to the kind of respect that dr. meade has in mexico. when you talk about the future of mexico, you talk about who will replace august in carstens, for example, as the head of the central bank. one of the first name that comes up all the time is dr. meade. when you talk about a 2018 presidential elections, one of the names always mentioned is dr. meade. that is just the kind of respect he has in mexico. he has had a big job as finance minister with a lot of challenges.
in the early part of this administration, that was increased, so therefore, credit rating agencies downgraded mexico's credit position. he has done a wonderful job in rebuilding that. i hope he will tell you about that. he has the task of making sure the historical reforms in energy and fiscal apology came up smoothly. i hope he will talk to you about that. that has been quite successful also. he has had other challenges that pertains to pemex, cfe, the electric company, and pertain to their social security institution. all three of which had terrible fiscal problems. he has been working on that. each of these tasks he has undertaken with great knowledge, great respect, and great diligence.
it is a pleasure to welcome you here to washington and to csis. we look forward to your comments. i will say, there will be questions afterwards. while his presentation will be economic, he has had such a diverse set of experiences, i think anything you want to ask about mexico he can answer. thank you very much. dr. meade. [applause] dr. meade: thank you, jim, for the great presentation. indeed, what makes it interesting is to of them he held after he was president. he became minister of finance after having been president, so i just keep that part, and then go back into finance. it is more expedient. maybe easier. the presentation is basically going to be three slides. i think the three slides help
paint a picture of mexico that has become more resilient, more diversified, and in some cases, surprising in terms of the challenges we have had to face, the way that we have faced them. i'm very cognizant of the fact of the person before me, he is much more spectacular than the and could have done the presentation in any one of the six languages he is fluent in. you will have to do with my mediocre english. it is howard always. that is what mexico has done in terms of growth. that is what is interesting about this picture, it looks quite boring. mexico has done around 2.5 on a yearly basis since 2014, less at the beginning of the administration, a little more at the end of the last administration.
but that consistent performance means that mexico today has an economy that is 20% larger than what we had in 2009. 20% is quite a big number. if i were 20% taller, i could be playing basketball. i think it is also remarkable. mexico has undergone a very strong headwind, not in the last couple of months, not in the last six months, which we had, but in the last couple of years. that is also in this graph. if you look at the blueline, that is all a gdp. that has been a drag to the mexican economy. the finance minister then woke up in 2014 and that is nice. then he woke up in june 2 around 40. that is not a nice price to have if you write on its minister in mexico. then it got worse. last year the price of oil was 18.
that means you lost 80% of your price of oil in a relatively short period of time, and you have to make that up through taxes. that was a very daunting challenge. if one would have had to bet what would happen in mexico if you lost such an important source of revenue, it would have been safe to assume we would have had very difficult and very difficult problems in finance. we have not. we have done well with public finances. we are fiscally consolidated throughout our deficit in 2016 was almost three percentage points lower than in 2014. we are going to run a primary surplus this year for the first time in -- since 2008. we are going to be amongst the few countries in latin america that does so, which means we are ahead of the curve in terms of fiscal consolidation.
not only did we have a lower price of oil, but we also had a lower level of platinum. in the calderon administration, the average was 2.7 million bars per day. this year it will be 2 million bars, a little bit less, 2 million barrels of oil a day. that is the first time since 1880 that the -- it had always been larger than that. 2004, the platform was 2.3 million barrels of oil a day. that was explained in a big way from one of the two largest fields in history of the energy sector in the world. that has been declining very fast. by itself, it produced more oil in 2003 that mexico is producing today. but behind those numbers lie, i think, something quite interesting as well. long-term production in mexico has increased by 700,000 barrels
a day. that is how much oil colombia produces, which means if you take it out of the equation, mexico's energy story is a good one. it is a very good one that should get bigger if one considers the potential impact of energy reform. one of the big headwinds was energy. what is happening in mexico in the last couple of years, we faced a difficult growth environment globally. every time we came to an imf meeting we have to explain why the world would underperform in terms of what was expected. that is a challenge for a country such as mexico, that relies in terms of growth on exports. they were not happening because there was no global growth. if you were to ask a finance
minister what was the best predictor of how mexico would do , he would point out to the u.s. industrial production. that has not grown in the last couple of years, actually negative. that means you have negative growth in terms of industrial production in the u.s., anemic growth in terms of the world, and a huge shock in terms of what was happening to your platform and what was happening to the price of oil. and yet, mexico has continued to grow and grow at a good pace. it is a growth rate that confirms to latin america, it will decrease if you take mexico out of the equation by 1.6% in toy 16, it compares well to the u.s., to europe. it does not compare well for our expectations. we would have wanted to do better, the reform to take us to a larger look level of growth. but relative to context, that level of growth is quite robust. there is an additional complication from the perspective of government, we
only have three tools that we can use to create an environment conducive to growth. we can do fiscal policy, we can do monetary policy, and we can do structural reforms. fiscal policy was therefore mexico in 2008 onward. mexico used the school policy as a countercyclical instrument after the crisis. we have run out of fiscal space and we have been fiscally consolidating and sending signals to the market that we will continue to do so, but that means fiscal is not helping in terms of growth. monetary policy was there for a long control of time. we have challenges in the exchange rate, given the uncertainty that we are now facing, specifically in the case of the u.s.-mexico relationship. so monetary policy has tightened. that means monetary policy is not helping us grow either. so what its way and the fact
that we are doing well? we engage in an agenda of structural reforms. we would have hoped that those reforms pick up on the national growth but the national growth was not there to help us. so the good results we see from the mexican economy are the result of an ambitious agenda of structural reforms. what makes that surprising is that mexico has not had a simple majority, the president has not enjoyed a simple majority in congress since 1997. many of these reforms required a qualified majority, so that means mexico was able to create a political atmosphere conducive to making those changes. you could not have mexico doing well in terms of its public finances were in not for fiscal reform. we would probably not be seeing the level of job creation we now have in the absence of labor reform. mexico has created 2.7 million jobs in this administration.
that compares with 4 million jobs that have been created in europe in the last four and a half years. that is the best job creation that we have had ever in our history or any four-your period. that is explained in part by labor, in part by energy, in part by telecommunications, in part by competition, and in part by financials. that means that when we recommend that people go structural and social, that is what following the advice does in terms of resilience. you have a country with very high headwinds that continues to perform well and that you have a very resilient economy. how are we doing in this trimester, given the uncertainty we have? we had a good november, good december, we actually over performed in terms of what the market was expecting. the market was expecting november 2 .5, we had 3.7.
the market was expecting december 1 .7 and we had 2.1. they were expecting a january of 1.9, and we had three. for the first time of the administration growth is actually over performing the expectations. that is not really that hard because the expectations were really low. but still, it is good to have positive surprises rather than negative ones in terms of growth. if you look at full employment, job creation was 139,000 new jobs. who's the best in history. reproduction increased 36.2.
it makes everybody else not as happy annually at a rate of 4.7 percent. and that means that the economy has continued to to do well, which shows that the level of complexity and the impacts that the reforms have had have been substantial informing the economy to withstand headwinds. it allows us to assume that if the headwinds become difficult, the mexican economy is poised to do well. some of these headwinds should be solved and a environment soon. this year the platform is stabilized and the environment has improved as compared to last year. even compared to last week.
we have a better and environment than we did then last time. i think what the people's mind is what is going to happen with mexico and the u.s.. and how we are going to find that process. some of these numbers are going to be familiar. they are continuing to be surprising. we are the third largest trading partner to the u.s. after china and canada. we're the second buyer of u.s. products after canada. once we have brexit, we are going to buy more from the u.s. than all of europe combined. that is one thing we are thankful for for brexit because we can say that without having any caveats to it. we buy more from the u.s. than many countries combined. upwards of four times more.
the largest market investor in the u.s.. if you go to a baseball match, the picture will be mexican, the hot dogs will be made by mexicans as well. that is just on a good day. it shows you the value of integration and economic process that is there. we are the first or second largest trading partner to the united states. i think that shows what everybody knows is that the u.s. is very important to mexico but it shows us that mexico is important also to the u.s.. i will finish to be able to answer some questions with the following. that is a map that was published mapping the future of global
civilization. it is a very surprising map. when i was in primary school, i wasn't good with geography. we had a test we had to identify a lot of the mexican states. for those of you that no mexico, -- i eventually studied more geography. if you look at the map, and you are asked to trace the borders between u.s., mexico, and canada, it is not an easy exercise. unless you have in your mind exactly where it is. what you are looking at is a north american region. looking at pipelines, highways, rail stations, electricity grids, and neither one of those
actually represent or allow you to trace the border in any easy way. one can argue whether this was a result of nafta or geography or whether this integration process would have happened without nafta. whether it was reinforced by nafta. the reality today is that that is a north american region. if we look at the electricity grid, the gas pipeline, the train rails, what you see isn't an integration process that doesn't recognize physical borders. behind the north american competitiveness, lives that's map that we see now and that is the starting point for this critical juncture. that is a map that reflects the fact that every single day, one
million crossings at the border take place. legal crossings at the border. behind each one of those crossings, there are people that are making a good life and generating prosperity. 370,000 vehicles cross the border every day. if one learns one thing in economics, it is that if you are voluntarily transacting, both are happy, one buying one selling. that's means that there must be a lot of happy people there given the amount and the volume of the trade that is happening in there. there is no other border in the world that is as heavily transited as the u.s. mexico border. the mexico and the texas relationship is larger by any single bilateral relationship in the u.s. has with any european country. it's on to more than 14 million people that have common
interests. there were over 250,000 flights between the u.s. and mexico. no other two countries have the same amount of air travel than mexico and the u.s. have. no other nationality visits mexico more than the u.s. do and vice versa. this has resulted in more security, inefficiencies in terms of value chain that allow us to be competitive. the starting point for this critical junction is the map. that map is different than what we had in 1994. it is what explains and what is at the core of the competitive region that could continue to be
very competitive, dynamic, and very secure. thank you for your attention and i will be happy to try to answer questions. as i said before, those that i can't answer, others can do that. [applause] >> we do have time for a few questions, but i think the last remarks shows what most people in this world no and that is that mexico's talent on economic policy is not exceeded by any other country in the world. their balance of fiscal and monetary policy over the past 25 years is absolutely superb. he is the latest example of that. >> [inaudible]
them both. and do it so they could generate more infrastructure on the border. nafta has approved more infrastructure projects on both sides of the border, so we have better crossings, water, sewage, and better energy on the border because of that. i guess they have the advantage of being a bilateral agitation. both administrations are happy to support it. both think there is a place that fosters better infrastructure at the border to play an even larger goal and expanding on the ambassadors's ideas when he was head of that. >> thank you very much.
i'm a journalist in washington. two questions. quickly. one, can you describe india and mexico relations under the prime minister's government, and mexico has been in the news a lot after president trump came into power, so what do you think -- how are you going to look at and economic programs. >> mexico and india have a lot of commonalities and we need to be reminded. the first ambassador of indicate that india to mexico was the prime minister. that show the level of importance that both countries due to each other.
it also shall the capacity to had a regional dialogue and interregional dialogue. the size of the economic relationship and a dialogue between india and mexico is not where it should be. it's not close to the potential that it has. in a way, many of the experiences that mexico has our president to india's effort to improve and increase their manufacturing capacity. i think there are many things successful in mexico i could be -- that could be implemented in india. we recognize that india plays a huge role in global growth. one of the leading growth engines in the markets and amongst them, we always think it
will do better if we were able to get a better economic dialogue ongoing between the two administrations. there has been dialogue to identify opportunities, and i think this strong friendships between both india and mexico will eventually be reflected in a strong economic presence of both countries in each country. the u.s. as well, the region will do well. we would like nothing more than the u.s. to be successful and to thrive. we clearly believe the north american integration process. we believe that integration process has resulted in competitiveness and that has benefited the north american region and the latin american region as well. we will continue to work and strive for the integration
process to continue so that we may remain -- we may remain even more dynamic so we can be globally successful. >> i think we have time for one more question. >> thank you very much minister. with regard to nafta, do you believe that the renegotiation could be completed by the first quarter or second quarter of 2018? and will it, and your view, be an update rather than a renegotiation in terms of rules of origin. there are 16,000 products that have different requirements for rules of that -- origin.
how will you change the rules of origin for so many different products, and do take it would include electronics and that the u.s. side will be satisfied with that? >> i will convey those questions to the minister. beyond that, i think there's room to improve on nafta. i think that nafta was an important integration process in the 90's, but today, i think nafta is that the core of the american integration process we saw here. there were things done today that wasn't even conceived of if net wasn't in the conversation. in the case of mexico telecommunications and energy, for example. if we aim to do too much in terms of pulling rigidities on the north american integration
structure, we risk losing north american value change to outside of the region. i think that, in terms of negotiations, we should be able to find an agreement where we managed to attract more north american value chains rather than endangering them. that is a common objective and that gives hope to the mexican administration. we will be able to get a good agreement. we think timing is important. we think it is important given our own calendar and the stage of the administration at which we are at. we are ready to constructively engage and to participate in a dialogue that generates value for both. >> i was with had more time, but he is on a tight time schedule with imf meetings etc.. mr. minister, thank you so much. wonderful presentation. [applause]
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trump signed several executive orders dealing with financial regulations. the dodd-frank financial regulation. he also says there will be a big announcement wednesday on tax reform. this is 10 minutes. president trump: it's a great pleasure to be at the united states treasury department and meet so many dedicated public servants. i went through that beautiful hallway with the incredible paintings of past secretaries. it was really very interesting. i want to read every one and learn about every one of them but we have one i hope will go down as one of the greats. i think hamilton is tough to